Ra big one Business is complex – often mind-numbing. A seemingly simple process such as accepting an order and receiving payment can have thousands of possible paths, for example if an additional credit check is required, delivery must be confirmed or a follow-up invoice sent. While often necessary, verbose code can complicate and slow down a company’s life. The resulting inefficiencies can cost businesses dizzying amounts of money—20% to 30% of annual revenue, according to one estimate.
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Software makers are now finding ways to untangle program spaghetti with the help of “process mining.” Despite its bland name, it is one of the fastest growing fields in information technology (it). According to Gartner estimates, it will have approximately $1 billion in annual sales in 2022 it Consulting and could triple in size over the next few years.German process mining company Celonis recently raised $1 billion at a $13 billion valuation, making it Germany’s largest startup and the country’s hottest tech success story since its inception sapa business software giant, was founded 50 years ago.
Consultants have long attempted to model and optimize business processes for corporate clients. But their abstract models rarely reflect complex realities. To get a better view, two things need to be done. Companies must be able to extract “log files” from it systems, showing in detail how these systems work. Algorithms must be developed to process this data. From there, “you can automatically build a model that shows you what’s really going on,” explains Wil van der Aalst, a pioneer in the field. Atlanta University of Aachen, Germany. This helps companies determine, for example, whether additional credit checks are causing unnecessary delays in shipping, or whether delivery confirmations are registered in a timely manner.
The concept of process mining is not new. Mr. van der Aalst started writing modeling algorithms in the 1990s. But it takes a startup like Celonis to “industrialize these ideas,” says Bastian Nominacher, who co-founded the company with two classmates in Munich in 2011.When they were asked to fix a dysfunctional problem, they stumbled upon process mining it system local broadcaster’s. They developed their first product in just three months. Instead of pitching it to business process executives like their competitors had done, they’re targeting senior executives with the promise of big savings (their software is prominently displayed on the dashboard). Early customers included German engineering giant Siemens, where Celonis was able to hone its products.It then expanded overseas by striking a deal sapsoftware (while rejecting takeover offers from larger tech companies). Today, it has 3,000 employees.
Celonis’ success (and a small but fast-growing market share of 65%) attracted competitors. About 50 companies now offer a range of mining services, from checking whether a process works in practice as it should on paper, to measuring how it compares to the same process at other companies. Process mining is increasingly being combined with artificial intelligence to predict where and when bottlenecks are likely to occur. Celonis sells a comprehensive “execution management system” that keeps track of processes and strives to improve their efficiency. Gartner’s Marc Kerremans observes that the same tools that allow companies to optimize their processes for speed and efficiency are already being used by some companies to limit other types of waste, such as carbon emissions.
Same as other hyped it, more than one process mining client ended up disappointed and its CEO wondered why it cost so much for so little. But done right, the benefits are huge. When Siemens started working with Celonis in 2011, there were 923,000 variants in its order-to-cash process alone. Today, about 10 million human interventions (a quarter of the total) have been eliminated. ■
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